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Questions and Answers

What is a primary function of financial management?

  • Maximizing shareholder wealth (correct)
  • Minimizing operational costs
  • Increasing employee satisfaction
  • Ensuring compliance with regulations
  • Which of the following is considered a primary financial statement?

  • Cash Flow Statement (correct)
  • Budget Report
  • Management Analysis
  • Sales Forecast
  • How can a company increase its return on investment (ROI)?

  • By investing in high-yield projects (correct)
  • By increasing debt levels
  • By reducing service quality
  • By expanding employee benefits
  • What is the primary risk associated with using debt financing?

    <p>Higher fixed payment obligations</p> Signup and view all the answers

    Which metric is commonly used to assess a company's liquidity?

    <p>Current Ratio</p> Signup and view all the answers

    Which financial management strategy can lead to misleading performance metrics?

    <p>Overstating revenue projections</p> Signup and view all the answers

    What can be a potential consequence of ignoring changes in market conditions during financial planning?

    <p>Unforeseen liquidity shortages</p> Signup and view all the answers

    Which of the following factors might lead to an inaccurate assessment of a company's financial health?

    <p>Using cash basis accounting</p> Signup and view all the answers

    What is a common risk of excessive reliance on performance ratios for decision-making?

    <p>Failure to capture market dynamics</p> Signup and view all the answers

    Which of the following approaches may lead to short-term gains at the expense of long-term financial stability?

    <p>Implementing aggressive cost-cutting measures</p> Signup and view all the answers

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